The turn of the millennium brought a turn in Ontario’s wheat market.
From the early 1970s until 2000 the Ontario Wheat Producers’ Marketing Board was the single desk seller of Ontario’s wheat crop, negotiating prices with domestic millers and making export sales.
In the 1990s, producers began lobbying for market deregulation.
Like in Western Canada at about the same time, the impetus for change came from producers looking at opportunities south of the border.
Fusarium problems in the United States resulted in sizable premiums for milling quality soft wheat, and an increasing number of producers, especially larger, market-savvy farmers located near the border, began campaigning for direct access to U.S. mills.
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In 2000, the board’s farmer-elected delegates voted to allow producers to sell 15 percent of the crop, or 150,000 tonnes, outside the board on a first-come, first-served basis. The exemptions, called direct marketing, were soon snapped up.
After a repeat in 2001, the exemption was raised to 300,000 tonnes for 2002 and demand was strong.
In July 2002 delegates voted to open the market completely and grant an unlimited number of exemptions beginning with the 2003 crop year.
The result was a near-stampede to the open market as farmers tested their new-found freedom and the board suffered adjustment pains.
In the 2003-04 marketing year, an estimated 82 percent of the crop was direct marketed, with just 18 percent going through the board. In 2004-05, direct marketing increased to 87 percent of the crop.
That changed in 2005-06, as lower prices made the pool a more attractive option. The final numbers aren’t in yet, but it’s expected the board’s market share will increase significantly, perhaps doubling.
With a potentially big 2006 crop because of a jump in plantings last fall, the board’s volume is expected to rise again.
Some say a market share of 15 to 20 percent shows a voluntary board can compete effectively in an open market.
“It demonstrates that marketing choice can work,” said Blair Rutter, executive director of the Western Canadian Wheat Growers Association, which wants an end to single desk selling in Western Canada.
Others say it shows the opposite. Canadian Wheat Board chair Ken Ritter calls the Ontario board “a shell of its former self.”
OWPMB manager Larry Shapton said the board remains the largest single handler and marketer of wheat, but added it’s not really concerned with its market share.
“We are indifferent as to where a producer markets his wheat,” he said.
“If he feels he can get a better price through the private trade, that’s great. We assume he goes where he gets the most value and that’s what the purpose of the whole thing is.”
Ontario wheat growers have three options if they choose to market through the board:
- Deliver into one of the board’s eight pool accounts between June 1 and Sept. 30.
- Use a cash contract and deliver their wheat at any time to a board-appointed agent, elevator or processor and receive that day’s spot price.
- Take out a forward price contract and lock in a price based on the Chicago Board of Trade futures.
OWPMB contracts entail a wait of about 10 days for payment, while direct market sales provide immediate full payment.
The board technically still holds its single desk authority, but as a matter of policy wheat producers in the province are deemed to have the right to sell into the open market through the direct-marketing program.
